A financial adviser to Deputy President Jacob Zuma Wednesday
pleaded not guilty to graft charges in a trial which could jeopardise the career
of the top politician, a possible successor to President Thabo Mbeki.

In one of post-apartheid South Africa's biggest trials, local
businessman Shabir Shaik is facing three main charges of fraud and corruption
which include claims that he paid Zuma to use his political clout to secure
business deals.

"I plead not guilty to all such counts presented to
me," a calm but tired-looking Shaik told a packed courthouse in this east
coast port city.

"I have been given a summary of fact. I am happy with the
facts as they stand," said Shaik, whose trial started in full after two
days of argument on whether the electronic media should be allowed to transmit a
live broadcast of proceedings.

Shaik, a scion of prominent Durban family, admitted paying a
cash-strapped Zuma money, but insisted that they were loans which Zuma intended
to repay.

"As a close friend (of Zuma), I was prepared to do whatever
I could to help him," said Shaik in a statement, read to court by his
lawyer Francois van Zyl.

"Over the years, a close friendship had developed between
Zuma and myself as well as between our respective families which endures to this
day," it added.

The businessman said he undertook to restructure Zuma's debt and
became his financial adviser in 1995.

Shaik faces three main counts of fraud and corruption and
secondary counts including money laundering, tax evasion, fraud and contravening
the Companies Act.

He allegedly paid Zuma R1.3 million between 1995 and 2001 to use
his political influence to help secure lucrative business deals.

He also stands accused of brokering a bribe between Zuma and
French arms firm Thint, the South African subsidiary of Thales International -
formerly known as Thomson-CSF - in which Thint would pay Zuma R500,000 a year in
return for protection in investigations into suspected irregularities in the
controversial arms deal.

The trial, which has sparked a nationwide media frenzy, could
have far-reaching implications for the political career of Zuma, seen by some to
be a possible successor to Thabo Mbeki who is serving his final term as South
Africa's president.

However, Judge Hilary Squires on Wednesday warned that Zuma was
not in the dock.

"The deputy president is not on trial," he said as
proceedings got under way, adding that anything that implied otherwise "is
irrelevant and inadmissible."

Squires underlined that the trial was also "not a
commission of inquiry" into a controversial multi-billion-dollar arms deal
in which Shaik has been implicated.

"It should be clearly understood that the summary of fact
is not established fact and unless proven it should not be regarded as
truth," the judge said.

The prosecution on Monday dropped corruption charges against
Thint, which was listed as one of the co-accused, in return for confirmation
from its director Alain Thetard that he was the author of a document that
allegedly records a bribe offer to Zuma.

Prosecutor Billy Downer said the state would seek to prove that
Zuma owed more than R1 million in construction costs while building a private
housing complex in his home state of KwaZulu-Natal and that he had "very,
very recently" repaid some money to a builder.

He said the deputy president had hoped to fund the construction
through the alleged bribe, the SAPA news agency reported.

Prosecutors also plan to present evidence that Shaik not only
made improper "loans" to Zuma, but also picked up the tab for the
leader's children's education, family allowances and personal items amounting to
more than R1 million.

Shaik however said that Zuma had insisted on repaying the money
with interest and had insisted on drawing up a formal loan agreement for a
revolving loan of up to R2 million.